Shal­iza?Has­sanali

There was no need for Min­is­ter of Fi­nance Colm Im­bert to en­gage of­fi­cials of the In­ter­na­tion­al Mon­e­tary Fund (IMF) and the World Bank to pro­vide ad­vice on T&T's fis­cal pol­i­cy.

This was the view yes­ter­day of de­vel­op­men­tal econ­o­mist Dr Ralph Hen­ry and for­mer min­is­ter in the min­istry of fi­nance Mar­i­ano Browne, fol­low­ing Im­bert's an­nounce­ment on Thurs­day that World Bank of­fi­cials are in T&T to as­sist and ad­vise the Gov­ern­ment on press­ing mat­ters, in­clud­ing a re­view of ex­pen­di­ture in all key ar­eas.

Hen­ry said T&T has done a lot on its own and did not re­quire ad­vice or ex­per­tise from the IMF.

While T&T's trans­fers and sub­si­dies were huge, Hen­ry said, "We don't need any­body from out­side to tell us that we need to look at it. Maybe you are look­ing at the IMF and World Bank to bless what you know you need to do. We have that prob­lem. It is some­thing very colo­nial. We don't think we can do cer­tain things un­less we get some­body from out­side...from for­eign."

Browne sup­port­ed Hen­ry's ar­gu­ment, say­ing he did not see the need for the IMF and World Bank's pres­ence since T&T is ca­pa­ble of mak­ing its own de­ci­sions.

"There is noth­ing pre­vent­ing him (Im­bert) from craft­ing poli­cies and then talk­ing to the IMF and World Bank pri­vate­ly. Why bring them in? The on­ly thing that I could read in­to bring­ing the IMF in is that he wants to get at the Her­itage and Sta­bil­i­sa­tion Fund im­me­di­ate­ly," Browne said.

The HSF has in­vest­ment worth an es­ti­mat­ed US$5.7 bil­lion.

Browne said he was be­mused and amused that Gov­ern­ment was go­ing back to the IMF and World Bank for ad­vice "when we said these were the peo­ple we did not want to go to at all. He (Im­bert) is try­ing to val­i­date that they are do­ing the right thing and we are con­sult­ing. He is al­so sig­nalling that the min­istry does not have the rel­e­vant tech­ni­cal ex­per­tise. If this is the case, then we are up a re­al gumtree."

Browne said to dip in­to the HSF, Im­bert would have to make changes in the law.

"The IMF could help him make those changes quick­ly. Then he would get ad­di­tion­al rev­enue and US dol­lars."

He said some of the de­ci­sions tak­en by the Gov­ern­ment have the na­tion in a state of "un­cer­tain­ty. The coun­try's back is against a wall. We have been for quite some time."

While Browne blamed the Peo­ple's Part­ner­ship for the state of the econ­o­my be­cause of their wan­ton spend­ing, he said the Peo­ple's Na­tion­al Move­ment has been slow and lacked "po­lit­i­cal will" in mak­ing the right choic­es.

"We are head­ing down a slip­pery slope," he warned.

Hen­ry said when a coun­try is in fi­nan­cial dif­fi­cul­ty and calls on the IMF for help, what they would of­fer was a "stan­dard pack­age...that would re­view a re­duc­tion in the pub­lic ser­vice, min­i­mum wage leg­is­la­tion, pri­vati­sa­tion of some state agen­cies and de­val­u­a­tion of its cur­ren­cy."

In the 1980's when Na­tion­al Al­liance for Re­con­struc­tion leader and for­mer prime min­is­ter ANR Robin­son turned to the IMF for help due to a fis­cal cri­sis, the pop­u­la­tion did not wel­come the news.

"The prob­lem was the mes­sage. Un­for­tu­nate­ly the NAR had to in­tro­duce aus­ter­i­ty mea­sures which cit­i­zens ob­ject­ed to. They in­tro­duced VAT, cut salaries of pub­lic ser­vants by ten per cent and re­moved CO­LA (Cost of Liv­ing Al­lowance). Robin­son was put be­tween a rock and a hard place."

He said Im­bert, on the oth­er hand, has far more flex­i­bil­i­ty than Robin­son did.

"But at the same time the pop­u­la­tion must see that the Gov­ern­ment is do­ing things to cre­ate new pos­si­bil­i­ties. You must have a fa­cil­i­tat­ing en­vi­ron­ment to en­cour­age in­vest­ment, flow of funds and new busi­ness­es. If you just fo­cus on cut­ting and slash­ing you lose track with things that you should be do­ing to ex­pand the econ­o­my and get dif­fer­ent sec­tors go­ing again. You spread a lack of con­fi­dence across the board. That is some­thing we can­not af­ford."

Hen­ry said Gov­ern­ment has to cre­ate a sense of hope for its cit­i­zens.

"That is even more crit­i­cal than think­ing where you can cut and what you can do to re­duce this and that. There are re­sources avail­able to us in our sys­tem right here. So we don't nec­es­sar­i­ly have to bor­row from abroad or have the IMF or World Bank iden­ti­fy sources of cred­it from out­side."

Pre­dict­ing fur­ther jobs loss­es will oc­cur, Hen­ry said Gov­ern­ment need­ed to have an in­sti­tu­tion­al arrange­ment to en­cour­age growth in oth­er sec­tors, which the pop­u­la­tion was not see­ing.

From here for­ward, Browne said, T&T must craft con­sis­tent poli­cies to redi­rect the coun­try.

"We have to re-in­vent the way Gov­ern­ment does busi­ness and make it far more lean and ef­fi­cient. We al­so have to treat with the way our busi­ness sec­tor op­er­ates, as well as our trade union move­ment. This is an op­por­tu­ni­ty not to be wast­ed and it does not come from the IMF and World Bank, it should come through lead­er­ship."

Browne said the de­ci­sions Im­bert made in the mid-year re­view should have been tak­en last Oc­to­ber.

"He is mak­ing de­ci­sions in piece­meal."

Don't raid the HSF–Dook­er­an

Al­so weigh­ing in on the is­sue was for­mer cen­tral bank gov­er­nor and fi­nance min­is­ter Win­ston Dook­er­an.

Dook­er­an said while it was good to have an in­de­pen­dent re­view of what the op­tions are in or­der to nav­i­gate the coun­try's fi­nan­cial chal­lenges, "such a re­view must be an­chored in an as­sess­ment of what is the to­tal frame­work with­in which the prob­lems are to be ad­dressed. It led me to be­lieve that what they are do­ing is not seek­ing an analy­sis of the new frame­work but a jus­ti­fi­ca­tion for what they have placed on the agen­da."

Dook­er­an said Im­bert's an­nounce­ment did not out­line a frame­work, but spoke about the dis­ag­gre­ga­tion of the HSF, which was es­tab­lished in 2000.

He said touch­ing the HSF should be a last re­sort.

"The Gov­ern­ment should not raid the fund at this stage."

He al­so cau­tioned that cut­ting back ex­pen­di­ture would not nec­es­sar­i­ly gen­er­ate growth.

"The end re­sult is not to cut the cloth to fit the Gov­ern­ment, but make sure the Gov­ern­ment de­signs a pro­gramme to fit the coun­try and its peo­ple."

Dook­er­an did not see a prob­lem with Gov­ern­ment seek­ing loans to re­vi­talise the econ­o­my.

"The is­sue is how would it be chan­nelled and whether it would be chan­nelled to sup­port lo­cal con­sump­tion or whether it would be chan­nelled to cre­ate cap­i­tal. That is the kind of frame­work that must be out­lined."

If mea­sures are not put in place, Dook­er­an said, cit­i­zens' con­fi­dence in the econ­o­my will con­tin­ue to be erod­ed.

Yes­ter­day, pres­i­dent of the Pub­lic Ser­vices As­so­ci­a­tion, Wat­son Duke, said now that the IMF and World Bank are giv­ing the Gov­ern­ment ad­vice, he hopes pub­lic ser­vants who are owed $2 bil­lion in back­pay will be paid.

"The PSA is on the war path. We will re­main on that path un­less this debt is cleared."

If the mon­ey is not paid, Duke said, pub­lic ser­vants will be­gin to demon­strate.

"We are not go­ing to sit down qui­et­ly and watch Im­bert dri­ve a dag­ger through the heart of the pub­lic ser­vice de­stroy­ing the lives of thou­sands."

Duke said re­trenched work­ers are now com­mit­ting sui­cide and "every time the Gov­ern­ment fails to pro­tect a frag­ile so­ci­ety they are dri­ving peo­ple to do the un­think­able."

Bud­get short­fall

In de­liv­er­ing the mid-year re­view on April 8, Im­bert re­vised the 2015/2016 $63 bil­lion bud­get to $59 bil­lion, pegged on a bud­get­ed oil price of US$35 per bar­rel and a gas price of $2 per mmb­tu.

He al­so in­di­cat­ed that there was a $15 bil­lion dol­lar gap be­tween T&T's cur­rent rev­enue of $44 bil­lion and to­tal ex­pen­di­ture at $59 bil­lion.

Last De­cem­ber, Prime Min­is­ter Kei­th Row­ley man­dat­ed Im­bert to cut the op­er­at­ing ex­pens­es at every state en­ter­prise, statu­to­ry body, min­istry and in the To­ba­go House of As­sem­bly by sev­en per cent.